On October 31, 2012, the General Counsel of the National Labor Relations Board (NLRB) issued an Advice Memorandum in two separate cases, concluding that the employer’s general at-will policy does not violate the National Labor Relations Act (NLRA or Act).

Rocha Transportation

Rocha Transportation is a Modesto, CA, company that transports containerized freight to and from California’s Central Valley and the Port of Oakland. All of Rocha’s new employees receive a copy of the Driver Handbook, which provides details about the applicable terms and conditions of employment. The handbook contains the following language in its “Statement of At-Will Employment Status”:

Employment with Rocha Transportation is employment at-will. Employment at-will may be terminated with or without cause and with or without notice at any time by the employee or the Company. Nothing in this Handbook or in any document or statement shall limit the right to terminate employment at-will. No manager, supervisor, or employee of Rocha Transportation has any authority to enter into an agreement for employment for any specified period of time or to make an agreement for employment other than at-will. Only the president of the Company has the authority to make any such agreement and then only in writing. (emphasis added).

Mimi’s Café

Mimi’s Cafe is a restaurant operator with locations in 24 states, including a restaurant in Casa Grande, AZ, where the charging party was employed. All of Mimi’s new employees sign for and receive a copy of a teammate handbook, which provides details about the applicable terms and conditions of employment. The handbook applies to all of Mimi’s facilities and contains the following language regarding employees’ “at-will” status:

AT-WILL EMPLOYMENT

The relationship between you and Mimi’s Cafe is referred to as “employment at will.” This means that your employment can be terminated at any time for any reason, with or without cause, with or without notice, by you or the Company. No representative of the Company has authority to enter into any agreement contrary to the foregoing “employment at will” relationship. Nothing contained in this handbook creates an express or implied contract of employment. (emphasis added).

The Charging Party’s Allegations and the General Counsel’s Analysis

In each case, the charging party alleged that the at-will language, particularly the bolded language, violates Section 8(a)(1) of the NLRA because it is overbroad and would reasonably chill employees in the exercise of their Section 7 rights to select union representation and engage in collective bargaining.

The General Counsel began the analysis by observing that an employer violates Section 8(a)(1) of the Act through the maintenance of a work rule or policy if the rule would “reasonably tend to chill employees in the exercise of their Section 7 rights.” The Board has developed a two-step inquiry to determine if a work rule would have such an effect. First, a rule is unlawful if it explicitly restricts Section 7 activities. Second, if the rule does not explicitly restrict protected activities, it will nonetheless be found to violate the Act upon a showing that: (1) employees would reasonably construe the language to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity; or (3) the rule has been applied to restrict the exercise of Section 7 rights.

According to the General Counsel, the Board has cautioned against “reading particular phrases in isolation,” and will not find a violation simply because a rule could conceivably be read to restrict Section 7 activity. Instead, the potentially violative phrases must be considered in the proper context. “Rules that are ambiguous as to their application to Section 7 activity, and contain no limiting language or context that would clarify to employees that the rule does not restrict Section 7 rights, are unlawful.” In contrast, “rules that clarify and restrict their scope by including examples of clearly illegal or unprotected conduct, such that they could not reasonably be construed to cover protected activity, are not unlawful.”

The General Counsel reasoned that in both cases addressed above, the employer’s employment at-will policy did not explicitly restrict Section 7 activity. Moreover, there was no indication that the employer promulgated its policy in response to union or other protected activity or that the policy had been applied to restrict protected activity. Thus, “maintenance of the contested handbook provisions is only unlawful if employees would reasonably construe it in context to restrict Section 7 activity.”

The General Counsel concluded that the contested handbook provisions would not reasonably be interpreted to restrict an employee’s Section 7 right to engage in concerted attempts to change his or her employment at-will status. “The provision(s) do … not require employees to refrain from seeking to change their at-will status or to agree that their at-will status cannot be changed in any way.” Instead, the provisions “simply prohibit … the Employer’s own representatives from entering into employment agreements that provide for other than at-will employment.”

In fact, according to the General Counsel, “the provision(s) explicitly permit … the Employer’s president to enter into written employment agreements that modify the employment at-will relationship, and thus encompasses the possibility of a potential modification of the at-will relationship through a collective-bargaining agreement that is ratified by the Company president.” Accordingly, the general counsel concluded that employees would not reasonably construe these provisions to restrict their Section 7 right to select a collective bargaining representative and bargain collectively for a contract.

The General Counsel recognized that in American Red Cross Arizona Blood Services Region an administrative law judge found that the employer had violated Section 8(a)(1) by maintaining the following language in a form that employees were required to sign acknowledging their at-will employment status: “I further agree that the at-will employment relationship cannot be amended, modified or altered in any way.” Applying the Lutheran Heritage standard, the ALJ found that the signing of the acknowledgement form, whereby the employee – through the use of the personal pronoun “I” – specifically agreed that the at-will agreement could not be changed in any way, was essentially a waiver of the employee’s right “to advocate concertedly … to change his/her at-will status.” Thus, the provision in American Red Cross more clearly involved an employee’s waiver of his Section 7 rights than did the handbook provisions. The parties settled that case before board review of the ALJ’s decision. According to the General Counsel, “(b)ecause the law in this area remains unsettled, the Regions should submit to the Division of Advice all cases involving employer handbook provisions that restrict the future modification of an employee at-will status.”

Implications

The General Counsel’s Advice Memoranda give employers some valuable information on how they can draft their at-will policies in a manner that does not potentially run afoul of the NLRA. Until the law is fully developed in this area, employers should avoid drafting policies that resemble individualized unqualified waivers by employees of their rights to select a union and bargain with the employer for a collective bargaining agreement.